Search Results for: Federal Reserve

By Pam Martens and Russ Martens: February 27, 2020 ~ During the financial panic of 1907, John Pierpont Morgan corralled the money men of New York together and convinced them to join him in bailing out teetering financial institutions in order to calm the panic in the markets. His plan worked. Flash forward to today. Jamie Dimon is Chairman and CEO of the bank that bears John Pierpont Morgan’s name: JPMorgan Chase. The bank is the largest federally-insured bank in the U.S. with $1.6 trillion in deposits. It has more than 5,000 bank branches across America accepting the life savings of moms and pops. But JPMorgan Chase is also the largest trading and derivatives house on Wall Street – a dangerous, combustible mix as it proved so well in 2012 when it lost $6.2 billion of depositors’ money making wild gambles in derivatives in London. On Tuesday of this week, … Continue reading →

By Pam Martens and Russ Martens: February 26, 2020 ~ Each year the Federal Reserve comes up with a hypothetical, severely adverse economic scenario against which it evaluates the ability of Wall Street’s mega banks to weather the storm. Called “stress tests,” this year’s severely adverse scenario features a severe global recession, unemployment of 10 percent, elevated stress in corporate debt markets and commercial real estate, along with a bank’s major counterparty defaulting if it has significant derivatives trading exposures. The stress test results are typically disclosed in June by the Fed with an immediate announcement by the banks (that get the green light from the Fed) about how many billions of dollars they plan to spend on stock buybacks and dividend increases to artificially boost their share prices. What the Federal Reserve has not planned for in its stress test is a global recession (which was looking entirely likely … Continue reading →

By Pam Martens and Russ Martens: February 21, 2020 ~ At 10:52 a.m. yesterday, the Dow Jones Industrial Average which was trading at a level of 29,348, began a bungee-style plunge. By 11:32 a.m. the market landed with a thud at a level of 29,013. Then the stock market began an equally inexplicable climb, closing the day down just 128 points. This is what is known as a “Flash Crash,” a sudden plunge in the market with no reliable explanation. No one on Wall Street has yet to offer a convincing explanation for the plunge. An early attempt to pass it off to worries about the coronavirus was easily dispelled because the news report of rising infections from the virus came much earlier than the plunge in the market. Our chart research also shows that the plunge was not related to the coronavirus because Procter & Gamble, a component of … Continue reading →

By Pam Martens and Russ Martens: February 19, 2020 ~ Paul Krugman, the New York Times columnist who won the 2008 Nobel Memorial Prize in Economic Sciences, is back to pedaling his Big Lie that Wall Street banks were not responsible for the financial crash of 2008 or the ensuing housing crash. This time he’s told such a doozie of a lie that there is no longer any doubt that he’s on a mission to restore Wall Street’s credibility, even if he has to rewrite the history of the financial crash and every official report that’s been published on it. The latest Big Lie from Krugman appeared in yesterday’s print edition but first appeared in the digital edition on Monday under a different headline, “Have Zombies Eaten Bloomberg’s and Buttigieg’s Brains?” In a very clever sleight of hand, Krugman is complaining, correctly so, about the fact that presidential candidate Michael … Continue reading →

By Pam Martens and Russ Martens: February 18, 2020 ~ Federal Reserve Chairman Jerome Powell sat through two days of grueling hearings before the House Financial Services Committee and Senate Banking Committee last week. At numerous times, the Fed and Powell were portrayed by Congressional members as sugar daddies for Wall Street while aloof to the financial suffering of the average American. (See Fed Chair Tells Congress There Is a 10-Year “Game Plan” to Deal with Financial Crisis But No Plan to Deal with Americans Left Devastated By It.) The House Financial Services Committee held its hearing on Tuesday. The Senate Banking Committee held its hearing on Wednesday. On Thursday, in a surprise move, the Fed announced that it would be trimming the $30 billion it has been making in 14-day loans (at about 1.60 percent interest) to Wall Street’s trading houses to $25 billion through March 12 and trimming … Continue reading →

By Pam Martens and Russ Martens: February 14, 2020 ~ Congresswoman Katie Porter opened a hornet’s nest on Tuesday during a House Financial Services Committee hearing where Fed Chair Jerome Powell answered questions. As we reported, Porter held up a photo of Powell in black tie attending a lavish party for billionaires and politicians at the Washington D.C. home of one of the richest men in the world, Amazon CEO Jeff Bezos. As it turns out, that wasn’t even the worst part of the story. The real jaw dropper is that the Bezos party was the after-party for a secretive private club’s annual dinner. The so-called Alfalfa Club is a 107-year old, invitation-only club that bars the press from attendance and banned membership of blacks and women for the bulk of its existence. Fed Chair Powell is a member of that club. More on that shortly, but first some background. … Continue reading →

 By Pam Martens and Russ Martens: February 13, 2020 ~ During his testimony to the Senate Banking Committee yesterday, Federal Reserve Chairman Jerome Powell let it slip out, for the first time, that the Federal Reserve has had a 10-year game plan to deal with the financial crisis. In response to a question on cyber threats from Senator Ben Sasse of Nebraska, Powell stated the following: “They kind of pay us to be awake at night worrying about things. I would say that if you look at what happened in the financial crisis, we had a game plan there. We implemented it over the course of 10 years. I won’t say that it’s perfect or anything like that, but we have a plan that is meant to address those kinds of things.” “Those kinds of things?” The financial crisis, fueled by corruption and lax regulation of Wall Street banks, destroyed … Continue reading →

By Pam Martens and Russ Martens: February 11, 2020 ~ The most sizzling moment thus far today in the House Financial Services Committee hearing with Federal Reserve Chairman Jerome Powell was a line of questioning by Congresswoman Katie Porter of California. Porter began by reminding Powell that he had “frequently spoken about wanting to maintain the independence of the Federal Reserve.” She then asked: “Do you still have that belief?” Powell said he did. Porter then held up a photo of Powell in black tie and asked where the photo was taken. He said it was at a party following the Alfalfa Dinner at the home of Jeff Bezos. Porter then made Powell indicate that the photo was recent, sometime in late January of this year. Porter looked squarely at Powell and stated: “Can you imagine how attending a lavish party at Jeff Bezos’ $23 million home, along with Jared and … Continue reading →

By Pam Martens and Russ Martens: February 11, 2020 ~ At 10:00 a.m. this morning, the Chairman of the Federal Reserve, Jerome (Jay) Powell, will take his seat in the Rayburn House Office Building to deliver his semiannual testimony to the House Financial Services Committee and answer a multitude of questions on what the Fed has been up to lately. Powell will repeat the process again tomorrow before the Senate Banking Committee. The public already knows the kinds of questions Democrats are going to lob at Powell tomorrow because Senators Sherrod Brown, Elizabeth Warren, Jack Reed and Tina Smith sent a letter to Powell on February 6, listing the specific questions they want answers to in preparation for the hearing on February 12. The questions are exclusively focused on the Fed’s unprecedented repo loans to Wall Street’s trading houses that began on September 17 of last year and have been … Continue reading →

By Pam Martens and Russ Martens: February 7, 2020 ~ On both days this week that the New York Fed offered its $30 billion in 14-day repo loans to 24 trading houses on Wall Street, there was far more demand than the New York Fed had preannounced it would provide. On Tuesday, the demand was for $59.05 billion while the New York Fed provided only $30 billion. On Thursday, the demand was for $57.25 billion while the New York Fed provided $30 billion. In short, there is a growing demand for long-term loans at affordable rates on Wall Street – meaning one or more trading houses has a borrowing problem. The Fed’s loans this week were made at a below-market interest rate of 1.60 percent. The demand for the 14-day loans came on the same days that the New York Fed also funneled huge amounts of money in one-day loans … Continue reading →